DRAM Patent Holder Rambus Called Out (Again) For Shredding Evidence

from the no-evidence-that-destroyed-evidence-was-relevant...-wait,-what? dept

Rambus Inc. is back in the news again as some of its questionable pre-litigation tactics have been highlighted by another company on the receiving end of a patent infringement lawsuit. Rambus Inc. sued SK Hynix and several other chip builders at the beginning of 2000, claiming to hold the rights to certain DRAM technology.

On Friday, Whyte found that Rambus destroyed documents when it anticipated litigation. Specifically, Whyte said, Rambus employees were told to destroy documents at annual "shred days," from 1998 to 2000, prior to filing the patent suits.

Because litigation was "reasonably foreseeable," Whyte ruled, Rambus should had preserved the documents.

"Rambus engaged in spoliation of evidence when it engaged in the destruction of documents on all three shred days," the 66-page ruling states.

"Annual shred days?" The fact that Rambus had not only a periodic event but a nickname for the event should probably be taken as an indication that the "company" needed to rid itself of possibly damning paperwork. It calls to mind something akin to mobsters moving suitcases of cash to their mothers' houses ahead of a RICO investigation.

Now, many companies will annually shred financial documents, personnel files, etc. that have reached the expiration date of federal and state retention requirements. However, what Rambus did hardly sounds like just being tidy, despite its "engineers are messy" defense.

Rambus countered that its engineers tended to be "pack rats" and said that its policy was justified...

SK Hynix had brought Rambus' "shredding days" to the attention of the disctrict court back in 2005, claiming that "Rambus had spoliated evidence and that its 'unclean hands' warranted dismissal of 15 infringement claims." This claim was dismissed and in 2011, US District Judge Ronald Whyte ordered SK Hynix to pay $397 million in royalties. On appeal, Whyte reexamined Hynix's claims and found that Rambus had indeed shredded plenty of documents, but possibly nothing relevant.

"The evidence does not show that Rambus knowingly destroyed damaging evidence," Whyte said.

"Although the evidence does not support a conclusion that Rambus deliberately shredded documents it knew to be damaging, the court concludes that Rambus nonetheless spoliated evidence in bad faith or at least willfully," he added.

He also gave Rambus a bit of a post-facto warning.

Because litigation was "reasonably foreseeable," Whyte ruled, Rambus should had preserved the documents.

Then there's this, in which Whyte states that the litigation might have gone differently if no documents had been shredded.

"Even if none of the destroyed documents would have shed new light on the disclosure obligation, there may have been internal Rambus documents containing information about Rambus' plans to gain market power by using information learned at [Joint Electron Device Engineering Council] JEDEC meetings. Such evidence could have been relevant and given support to Hynix's equitable claims and defenses," Whyte said.

"The court concludes that Hynix has made a plausible, concrete suggestion that it may have been prejudiced by destruction of JEDEC-related documents, and that Rambus has not overcome this suggestion of prejudice by clear and convincing evidence."

Despite all this, SK Hynix is still on the hook for royalties. The $397 million might be reduced, but any reduction would have more to do with royalties Rambus has already collected from other companies, rather than any excessive shredding or the fact that it basically reverse engineered its patents to cover new industry standards. Unfortunately for SK Hynix, the shredding that has already resulted in two Rambus infringement suits being tossed out doesn't seem to be doing much for it.

Well, it's also a case of a U.S. company against a Korean company. Like Apple vs Samsung. It seems a bit that U.S. companies are a bit favored in (U.S.) court. It'll probably would go another way in Korean or Chinese court.

@2

and a canadian court and a european court and ya well pretty much everywhere else and you can bet eventually these other courts will counter the damages such that it won't be profitable by rambus or apple to continue these farces of justice

Annual Shred Days

The notion that the company having an annual document shredding period called "shred days" or "shredding days" is any proof of wrongdoing is absolute nonsense. It is common practice in many organizations (witness as example, Kansas State University where I am employed) to have periodic "shred days" (called just that in our case) to encourage the timely destruction of confidential records for which the statutory requirement for maintenance has lapsed (e.g. in the university circumstance 6 year old final exams) or for which there was no statutory requirement for maintenance (e.g., again in our case, last semesters' homework papers students didn't claim, but which are still confidential records under FERPA). Surely in the corporate world there are lots of analogous documents which folks idly keep in their files, and for which annual shred days are entirely appropriate and indicate no connivance against potential litigants.

It may well be in the present case the documents that shouldn't have been shredded were reduced to confetti during the prior annual shredding days, but the shredding days themselves is neither here nor there as a point of fact, and hardly indicative of malicious intent on the company's part.

Re: Annual Shred Days

When are they going to send these guys to jail? If you are in charge of a company and the company breaks the law or harms people with it's policies the executives should go to jail. Right away. Lock up Wall Street, Lock up K street and we might get this country back.

Re:

I can't wrap my head around the concept of a shred day being something illegal or immoral. What else are they supposed to do with all the crap paperwork? Put it in a crate on the curb and put a sign there that says "please don't steal all our confidential docuemnts"?